Gig Economy case calls for contract reviews

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Businesses who use self-employed personnel to deliver their services to clients are being urged to review their contractual arrangements with staff in light of a ground-breaking Supreme Court case.

That’s the advice from Mark Ridley, Partner in the employment department at Band Hatton Button solicitors, after the Supreme Court ruled that self-employed plumber Gary Smith, who had been working for Pimlico Plumbers between 2005 and 2011, should have been given workers’ rights.

Although Smith was VAT registered and paid self-employed tax, he had been working solely for Pimlico Plumbers for six years in a branded uniform and van, and he was required to work a minimum number of hours per week.

As such, it was ruled that he was entitled to workers’ rights such as holiday and sick pay, despite Pimlico’s claim that Smith had the freedom to reject work and find a replacement.

In light of the ruling, Mark Ridley is advising businesses to monitor what specific agreements are in the contracts they draw up for self-employed members of staff.

He said: “Whilst Mr Smith was technically able to reject work other factors outweighed this, such as there being no unfettered right to send a substitute in his place with an obligation to personally perform the work for Pimlico plumbers – he also wore the company uniform, drove their van and had to work a set number of hours. As such it could not be said that he was self-employed and that the company was his customer.

“Mr Smith has now been classified as a worker, which entitles him to protection of the national minimum wage, paid annual leave, right to rest breaks, pension contributions and some employment tribunal claims.

 “Cases such as this one reinforces the growing call for the government to regulate the rights of workers in the ‘gig economy’ which is made up of short-term and freelance contracts.

“Self-employed workers are likely to explore their own position and rights off the back of this court case, so companies operating such contracts would be well advised to review their practices and contracts.

“Despite some quarters hailing this as a watershed moment for the rights of ‘gig economy’ workers, cases will still be monitored on a case-by-case basis, hence the importance for businesses to review their contractual agreements carefully.”